The Impact of the Unemployment Benefit System on International Spillover Effects

Based on a two-country model it is scrutinized how the structure of the unemployment benefit system affects the consequences of idiosyncratic labor market shocks on real wages and unemployment in other countries. International spillover effects are caused by changes in world real income. The paper provides new insights on how changes in world real income affect labor demand and the wage bargaining process. The analysis of the interaction of shock spillovers and benefit system focuses on two-tier as well as pure earnings-related and flat-rate benefit systems. Im Rahmen eines Zweiländermodells wird untersucht, wie die Auswirkungen idiosynkratischer Arbeitsmarkschocks auf Reallöhne und Beschäftigung in anderen Ländern vom System der Arbeitslosenunterstützung beeinflusst werden. Es werden Systeme mit ausschließlich lohnabhängiger oder pauschaler Arbeitslosenunterstützung sowie zweistufige Systeme betrachtet. Der Übertragungsmechanismus länderspezifischer Arbeitsmarktschocks beruht auf der mit den Schocks einhergehenden Veränderung des realen Welteinkommens. Die vorliegende Arbeit macht deutlich, in welcher Weise Arbeitsnachfrage und Lohnsetzungsprozess von Änderungen des realen Welteinkommens berührt werden

Real Wages and the Business Cycle in Germany

This paper establishes stylized facts about the cyclicality of real consumer wages and real producer wages in Germany. As detrending methods we apply the deterministic trend model, the Beveridge-Nelson decomposition, the Hodrick-Prescott filter, the Baxter-King filter and the structural time series model. The detrended data are analyzed both in the time domain and in the frequency domain. The great advantage of an analysis in the frequency domain is that it allows to assess the relative importance of particular frequencies for the behavior of real wages. In the time domain we find that both real wages display a procyclical pattern and lag behind the business cycle. In the frequency domain the consumer real wage lags behind the business cycle and shows an anticyclical behavior for shorter time periods, whereas for longer time spans a procyclical behavior can be observed. However, for the producer real wage the results in the frequency domain remain inconclusive.real wages, business cycle, frequency domain, time domain, Germany, trend-cycle decomposition, structural time series model, phase angle

Does downward nominal wage rigidity dampen wage increases?

Focusing on the compression of wage cuts, many empirical studies find a high degree of downward nominal wage rigidity (DNWR). However, the resulting macroeconomic effects seem to be surprisingly weak. This contradiction can be explained within an intertemporal framework in which DNWR not only prevents nominal wage cuts but also induces firms to compress wage increases. We analyze whether a compression of wage increases occurs when DNWR is binding by applying Unconditional Quantile Regression and Seemingly Unrelated Regression to a data set comprising more than 169 million wage changes. We find evidence for a compression of wage increases and only very small effects of DNWR on average real wage growth. The results indicate that DNWR does not provide a strong argument against low inflation targets. --Downward Nominal Wage Rigidity,Wage Stickiness,Wage Compression,Unconditional Quantile Regression

The Impact of the Benefit System on International Spillover Effects

Based on a two-country model it is scrutinized how the structure of the unemployment benefit system affects the consequences of idiosyncratic labor market shocks on real wages and unemployment in other countries. International spillover effects are caused by changes in world real income. The paper provides new insights on how changes in world real income affect labor demand and the wage bargaining process. The analysis of the interaction of shock spillovers and benefit system focuses on two-tier as well as pure earnings-related and flat-rate benefit systems.benefit system, unemployment, real wages, open economy, wage bargaining

Downward Nominal Wage Rigidity in Europe: An Analysis of European Micro Data from the ECHP 1994-2001

This paper substantially extends the limited available evidence on existence and extent of downward nominal wage rigidity in the European Union and the Euro Area. For this purpose we develop an econometric multi-country model based on Kahn�s (1997) histogram-location approach and apply it to employee micro data from the European Community Household Panel (ECHP) for twelve of the EU�s current member states. Our estimates for the degree of downward nominal wage rigidity on the national as well as the EU-wide level point to marked downward nominal wage rigidity within the European Union. Dieser Beitrag liefert eine erhebliche Erweiterung der bislang nur spärlich vorhandenen Evidenz zum Ausmaß der Abwärtsnominallohnstarrheit in der Europäischen Union und im Eurogebiet. Zu diesem Zweck wird auf Basis des Histogram-Location-Approach von Kahn (1997) ein ökonometrisches Mehrländermodell entwickelt und auf die Daten des Europäischen Haushaltspanels für zwölf EU-Mitgliedsländer angewandt. Die Schätzergebnisse deuten sowohl auf nationaler als auch auf europäischer Ebene auf ausgeprägte Abwärtsnominallohnstarrheit hin.Lohnstarrheit ; Europäische Union ; Europäische Union / Währungsunion / Mitgliedsstaaten ; Lohnbildung ; Nominallohn ; Rigidität; Abwärtsnominallohnstarrheit ; Europäisches Haushaltspanel ; ECHP ; Lohnrigidität ; Histogram-Location-Ansatz; Downward Nominal Wage Rigidity ; Wage Stickiness ; European Comunity Household Panel ; European Union ; Euro Area

Does Downward Nominal Wage Rigidity Dampen Wage Increases?

Focusing on the compression of wage cuts, many empirical studies find a high degree of downward nominal wage rigidity (DNWR). However, the resulting macroeconomic effects seem to be surprisingly weak. This contradiction can be explained within an intertemporal framework in which DNWR not only prevents nominal wage cuts but also induces firms to compress wage increases. We analyze whether a compression of wage increases occurs when DNWR is binding by applying Unconditional Quantile Regression and Seemingly Unrelated Regression to a data set comprising more than 169 million wage changes. We find evidence for a compression of wage increases and only very small effects of DNWR on average real wage growth. The results indicate that DNWR does not provide a strong argument against low inflation targets.downward nominal wage rigidity, wage stickiness, wage compression, unconditional quantile regression

The Impact of the Unemployment Benefit System on International Spillover Effects

Based on a two-country model it is scrutinized how the structure of the unemployment benefit system affects the consequences of idiosyncratic labor market shocks on real wages and unemployment in other countries. International spillover effects are caused by changes in world real income. The paper provides new insights on how changes in world real income affect labor demand and the wage bargaining process. The analysis of the interaction of shock spillovers and benefit system focuses on two-tier as well as pure earnings-related and flat-rate benefit systems. Im Rahmen eines Zweiländermodells wird untersucht, wie die Auswirkungen idiosynkratischer Arbeitsmarkschocks auf Reallöhne und Beschäftigung in anderen Ländern vom System der Arbeitslosenunterstützung beeinflusst werden. Es werden Systeme mit ausschließlich lohnabhängiger oder pauschaler Arbeitslosenunterstützung sowie zweistufige Systeme betrachtet. Der Übertragungsmechanismus länderspezifischer Arbeitsmarktschocks beruht auf der mit den Schocks einhergehenden Veränderung des realen Welteinkommens. Die vorliegende Arbeit macht deutlich, in welcher Weise Arbeitsnachfrage und Lohnsetzungsprozess von Änderungen des realen Welteinkommens berührt werden.Arbeitslosenunterstützung ; Arbeitslosigkeit ; Reallohn ; Offene Volkswirtschaft ; Lohnbildung; ; benefit system ; unemployment ; real wages ; open economy ; wage bargaining

Downward Nominal Wage Rigidity in Europe: An Analysis of European Micro Data from the ECHP 1994-2001

This paper substantially extends the limited available evidence on existence and extent of downward nominal wage rigidity in the European Union and the Euro Area. For this purpose we develop an econometric multi-country model based on Kahn's (1997) histogram-location approach and apply it to employee micro data from the European Community Household Panel (ECHP) for twelve of the EU's current member states. our estimates for the degree of downward nominal wage rigidity on the national as well as the EU-wide level point to marked downward nominal wage rigidity within the European Union.Downward Nominal Wage Rigidity; Wage Stickiness; European Community

Strukturelle Arbeitslosigkeit in Europa : eine Bestandsaufnahme (Structural unemployment in Europe * an inventory)

"This paper summarises, explains and evaluates the most important findings on the scale and causes of structural unemployment in Europe against the background of a standardised theoretical frame of reference. In literature, structural unemployment is usually interpreted as the unemployment that is consistent with a constant inflation rate in the long term. This unemployment rate is also called the long-term NAIRU or natural unemployment rate. The critical evaluation of various methods to estimate the long-term NAIRU and a short overview of the variety of results of different empirical studies make it obvious that NAIRU estimates do not permit precise statements at present regarding the scale of structural unemployment. Empirical research on the determinants of the long-term NAIRU suggests that the international differences in the development and in the level of the long-term NAIRU can best be explained by the interaction of macro-economic shocks and institutions. However, a detailed examination of the individual studies shows the low robustness and the partly inconsistent estimate results. Therefore, at the present state of research, the macro-econometric evidence concerning the scale and causes of structural unemployment must be treated with caution " (Author's abstract, IAB-Doku) ((en))strukturelle Arbeitslosigkeit - internationaler Vergleich, NAIRU, Arbeitslosenquote, Europa, USA, Australien, Japan, Neuseeland, Bundesrepublik Deutschland

Strukturelle Arbeitslosigkeit in Europa: Eine Bestandsaufnahme

In diesem Beitrag werden die wichtigsten Erkenntnisse zu Ausmaß und Ursachen der strukturellen Arbeitslosigkeit in Europa vor dem Hintergrund eines einheitlichen theoretischen Bezugrahmens zusammengefasst, erklärt und bewertet. Die strukturelle Arbeitslosigkeit wird in der Literatur üblicherweise als diejenige Arbeitslosigkeit interpretiert, die langfristig mit einer konstanten Inflationsrate vereinbar ist. Diese Arbeitslosenquote wird auch als langfristige NAIRU oder natürliche Arbeitslosenquote bezeichnet. Die kritische Würdigung verschiedener Verfahren zur Schätzung der langfristigen NAIRU und ein kurzer Überblick über die Ergebnisvielfalt verschiedener empirischer Studien machen deutlich, dass NAIRU-Schätzungen derzeit keine präzisen Aussagen über das Ausmaß der strukturellen Arbeitslosigkeit zulassen. Empirische Untersuchungen zu den Determinanten der langfristigen NAIRU legen die Vermutung nahe, dass die internationalen Unterschiede in Entwicklung und Niveau der langfristigen NAIRU am besten durch die Interaktion von makroökonomischen Schocks und Institutionen erklärt werden können. Die detaillierte Betrachtung der einzelnen Studien macht allerdings die geringe Robustheit und die teilweise widersprüchlichen Schätzergebnisse deutlich. Die makroökonometrische Evidenz zu Ausmaß und den Ursachen der strukturellen Ar-beitslosigkeit muss bei dem derzeitigen Stand der Forschung daher mit Vorsicht beurteilt werden. This paper summarises, explains and evaluates the most important findings on the extent and causes of structural unemployment in Europe. In the literature, structural unemployment is usually interpreted as the unemployment that is consistent with a constant inflation rate in the long run. This unemployment rate is also called the long-run NAIRU or natural unemployment rate. The critical evaluation of various methods to estimate the long-run NAIRU and a short overview of the variety of results of different empirical studies make it obvious that NAIRU estimates at present do not permit precise statements with regards to the extent of structural unemployment. Empirical research on the determinants of the long-run NAIRU suggests that the international differences in the development and in the level of the long-run NAIRU can best be explained by the interaction of macroeconomic shocks and institutions. However, a detailed examination of the empirical studies shows the low robustness and inconsistency of the estimation results. Therefore, at the present state of research, the macroeconometric evidence concerning the extent and causes of structural unemployment must be treated with caution.Strukturelle Arbeitslosigkeit ; Phillips-Kurve ; Arbeitsmarkttheorie ; Arbeitsmarkt / Struktur; NAIRU ; natürliche Arbeitslosenquote ; Arbeitsmarktinstitutionen; NAIRU ; natural rate of unemployment ; labor market institutions